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May 18, 2017

What is a Special Purpose Vehicle? (or SPV?)

wagons in a dreamlike state with ptara logoA Special Purpose Vehicle, or Single purpose vehicle, is a company that is created for a single project.

Single Purpose Vehicles are used in construction, public works and many other ventures.  While they are becoming less popular for other ventures, SPVs have become increasingly popular in film production.

Now, in the old days, film companies shied away from Special Purpose vehicles.  When film producers also owned the cinemas and actors were on contract, it made little sense to create more paperwork for each film.

But today, with changes in the way a film is financed and sold, a special purpose vehicle can be extremely useful.

Films can carry with them many long term obligations, from credits and percentage points for the actors to content agreements and more.  As most production companies don’t distribute their own films, it often makes little sense for them to continue dealing with a film after it’s made.

The “vehicle” keeps the film separate from the production company’s other activities. When the film is finished, the SPV can be sold to a distribution company, allowing the production company to focus on the next project. It also allows investors to benefit from tax breaks.

There’s a mention on the British Film Commission’s website.

http://www.britishfilmcommission.org.uk/film-production/uk-film-tax-relief/

So, while Ptara is the company that produces films, does a lot of paperwork and runs our office, another company, an SPV, may be the one that you invest in or sign a contract with.

When the SPV is taken over by a distributor, the distributor will take over the SPV’s obligations and Ptara will concentrate on new projects.

On occasion, an SPV continues as a company on its own and produce more films.